Business Concentration and Preservation of Competition
- Spain
- 05/07/2002
The accelerated globalization of economic relations, and the effects that this process has had on business activity, has unleashed a surge in mergers and concentration agreements between companies in recent years. With respect to this activity, authority to issue written opinions on such agreements was assigned to the Defense of Competition Court as provided by Chapter II of the Defense of Competition Law 16/89, and they have gained increasing relevance.
If we look briefly at the statistics, we can quantify this increasing relevance. While in the first ten years the above-mentioned Law was in effect, the Court prepared an annual average of two to three written opinions, while in the last three years the annual average has increased to fourteen opinions. Undoubtedly, a major contributor to this increased review of business concentration matters has been the enactment of Royal Decree-Law 6/1999, of April 16, 1999, regarding Urgent Measures of Liberalization and Increase in Competition, Article 10 of which establishes the obligation to make a notification of such agreements when they result in the attainment of certain income and market-share thresholds…
The role of the Court in this process is of an advisory nature, with the Spanish government issuing the final decision as to the appropriateness of proposed concentrations. The participation of the Court occurs when the Economic Ministry determines the subject concentration to be a possible obstacle to the maintenance of effective competition in the relevant market. In such cases, the Economic Ministry will request a non-binding written opinion from the Court, which is forwarded to the Counsel of Ministries which, upon review of the opinion and other economic policy considerations, makes the final decision. In this regard, it is important to note that in the majority of cases the Spanish government has followed the recommendations of the Court; to be exact, in only five instances of nearly 70 issued opinions has the result been otherwise.
The analysis of the Court is focused on the consequences such business arrangements may have on the existing status of competition in affected markets, with the intention of the review not to constitute a general opposition to such arrangements rather, simply, to be a necessary safeguard with respect to the framework providing competition in relevant markets. At the same time, the process attempts to ensure to the fullest extent the principle of free commerce embodied in our Constitution.
